Investors are expected to allocate funds to upcoming Ether exchange-traded funds (ETFs) based on the relative size of Ether compared to Bitcoin, according to a report by Bitwise.
The report, authored by Bitwise CIO Matt Hougan, predicts Ether ETFs, upon approval in the U.S., could attract $15 billion in net investments within their first 18 months.
This prediction hinges on the relative market dominance of Bitcoin and Ether. Currently, Bitcoin holds a hefty 74% share of the combined crypto market value. Hougan suggests investors will likely mirror this dominance when allocating funds to both Bitcoin and Ether ETFs.
The report underscores the significant growth potential of Ether ETFs. Since their introduction earlier this year, spot Bitcoin ETFs have raked in $56 billion from U.S. investors. This figure is projected to climb past $100 billion by the end of 2025, fueled by wider adoption on major trading platforms.
“Using the $100 billion figure as a benchmark,” Hougan writes, “Ether ETFs would require roughly $35 billion to achieve parity, a process I anticipate taking 18 months.”
However, factors like Bitcoin’s “first-mover advantage” could dampen Ether ETF enthusiasm. The Grayscale Ethereum Trust, currently holding $10 billion, is expected to convert into a spot ETF, leaving a gap of $25 billion to reach parity with Bitcoin ETFs.
The report cites Canada’s Ether ETF market as an example. There, Ether ETFs only capture around 22% of total assets under management (AUM), suggesting potential underperformance compared to its actual market share. Hougan suggests this might be due to investors assuming a Bitcoin ETF provides sufficient crypto exposure.
Accounting for this potential underperformance, the report revises the net inflow estimate to $18 billion. Additional factors might further reduce this figure by $3 billion.
Overall, the report paints a promising picture for Ether ETFs, with significant potential inflows. However, Bitcoin’s established dominance may cast a shadow on Ether’s growth trajectory.
